Watches of Switzerland stock falls by nearly a third after 'volatile' Christmas

MW Watches of Switzerland stock falls by nearly a third after 'volatile' Christmas

By Jamie Chisholm

Shares in Watches of Switzerland plunged by nearly a third on Thursday, after the luxury watch seller warned that sales would be lower than expected after U.K. shoppers eschewed expensive trinkets during the crucial festive season.

"[C]hallenging macro-economic conditions impacted consumer spending in the luxury retail sector. We now expect these challenging conditions to remain for the balance of our fiscal year," said the London-listed group.

The retailer, which sells brands including Rolex, Breitling and Patek Philippe, now expects full-year 2024 revenue of between GBP1.53 billion ($1.94 billion) and GBP1.55 billion, down from its previous forecast range of GBP1.65 billion to GBP1.70 billion.

"The festive period was particularly volatile this year for the luxury sector, with consumers allocating spend to other categories such as fashion, beauty, hospitality and travel," said chief executive Brian Duffy.

Watches of Switzerland shares (UK:WOSG) (WOSGF) were at one point on Thursday down 32.3%, a record decline that took the stock to its lowest since October 2020. Since reaching a record high of nearly 1,500p in December 2021, when the luxury sector attracted high levels of spending during the COVID pandemic, the shares have lost 73%.

The luxury retailer's shares have also suffered from news last year that Rolex had bought its competitor Bucherer, raising concerns the watch maker would sell more of its timepieces direct to consumers.

"Retail trends indicate consumers have prioritised experiences such as foreign holidays over big-ticket items in recent months and that has meant fewer people have given Watches of Switzerland the time of day," said Russ Mould, investment director at AJ Bell.

"This has extended problems for the company which emerged last year where sales growth slowed and the watch market was flooded with second-hand timepieces, weighing on prices," Mould added.

Watches of Switzerland follows London-listed Burberry (UK:BRBY) (BURBY) in being the latest luxury goods group to warn of flagging sales amid softer economic conditions.

However, there was better news for the sector out of Switzerland, where luxury conglomerate Richemont reported a sharp uptick in its revenues in the final three months of 2023, driven by surging jewelry sales in China and Japan.

Richemont shares (CH:CFR) (CFRUY) added nearly 10% and this helped to lift French peers such as LVMH (FR:MC) (LVMHF), Kering (FR:KER) (PPRUY) and Hermes International (FR:RMS), pushing the CAC 40 in Paris up 0.8%.

Germany's DAX DX:DAX added 0.6%, while London's FTSE 100 UK:UKX was a laggard with a gain of just 0.2% as utilities struggled again after a higher-than-expected inflation reading on Wednesday continued to hit interest rate-sensitive sectors.

One bright spot in London was Flutter Entertainment (UK:FLTR). Shares in the betting group that owns FanDuel jumped 13% as investors shrugged off news of a string of punters' wins and welcomed a U.S. listing planned for Jan. 29 on the New York Stock Exchange.

-Jamie Chisholm

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January 18, 2024 07:31 ET (12:31 GMT)

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